Taylor Construction Group Pty Ltd v Strata Plan 92888 t/as the Owners Strata Plan 92888

[2021] NSWSC 1315

Supreme Court

New South Wales

Medium Neutral Citation:

Taylor Construction Group Pty Ltd v Strata Plan 92888 t/as The Owners Strata Plan 92888 [2021] NSWSC 1315

Hearing dates:

16 October 2020

Date of orders:

18 October 2021

Decision date:

18 October 2021

Jurisdiction:

Common Law

Before:

Henry J

Decision:

(1)   Grant leave to appeal.

(2)   Dismiss the amended summons filed by the First Plaintiff and the cross-summons filed by the Second Plaintiff.

(3)   Unless any party makes an application for a different costs order within 14 days, the Defendant’s costs of these proceedings be paid by the First and Second Plaintiffs on an ordinary basis as agreed or assessed.

Catchwords:

ADMINISTRATIVE LAW – appeal pursuant to s 83 of the Civil and Administrative Tribunal Act 2013 (NSW) – decision of Appeal Panel of Civil and Administrative Tribunal that use of “Biowood” attachments to external walls of multi-storey residential buildings constitutes undue risk of fire spread – whether incorrect formulation and application of proper test and the Building Code of Australia – whether finding of undue risk made in absence of evidence – appeal dismissed

Legislation Cited:

Civil and Administrative Tribunal Act 2013 (NSW), ss 80(2), 83(1), 83(3)

Environmental Planning and Assessment Regulation 2000 (NSW), cl 98(1)(a)

Home Building Act 1989 (NSW), s 18B(1)

Cases Cited:

Amaca Pty Ltd (under NSW administered winding up) v Raines; Seltsam Pty Ltd v Raines [2018] NSWCA 216

Amaca Pty Ltd v Frost (2006) 67 NSWLR 635; [2006] NSWCA 173

Attorney-General (Cth) (Ex rel McKinlay) v The Commonwealth (1975) 135 CLR 1; [1975] HCA 53

Be FinancialPty LtdastrusteeforBeFinancialOperationsTrustvDas [2012] NSWCA 164

Bronze Wing International Pty Ltd v SafeWork NSW [2017] NSWCA 41

Collector of Customs v Agfa-Gevaert Ltd (1996) 186 CLR 389; [1996] HCA 36

Collector of Customs v Pozzolanic Enterprises Pty Ltd (1993) 43 FCR 280; [1993] FCA 456

Collins v Urban [2014] NSWCATAP 17

Commissioner of Taxation v BHP Billiton Ltd (2011) 244 CLR 325; [2011] HCA 17

Corcoran v Far [2019] NSWSC 1284

Federal Commissioner of Taxation v Broken Hill South Ltd (1941) 65 CLR 150

Federal Commissioner of Taxation v Trail Bros Steel & Plastics Pty Ltd (2010) 186 FCR 410; [2010] FCAFC 94

Gray v Minister for Energy, Environment & Climate Change [2020] VSCA 121

Health & Nutrition Association Ltd v Hive Marketing Group Pty Ltd (2019) 99 NSWLR 419; [2019] NSWCA 61

JaycarPtyLtdvLombardo [2011] NSWCA 284

Kostas v HIA Insurance Services Pty Ltd (2010) 241 CLR 390; [2010] HCA 32

Life Insurance Company of Australia Ltd v Phillips (1925) 36 CLR 60; [1925] HCA 18

Minister for Immigration and Ethnic Affairs v Wu Shan Liang (1996) 185 CLR 259; [1996] HCA 6

NSW Land and Housing Corporation v Orr (2019) 100 NSWLR 578; [2019] NSWCA 231

Owners – Strata Plan no 69312 v Rockdale City Council; Owners of SP 69312 v Allianz Aust Insurance [2012] NSWSC 1244

Owners Corporation No.1 of PS613436T v LU Simon Builders Pty Ltd (Building and Property) [2019] VCAT 286

Public Service Association and Professional Officers' Association Amalgamated Union of New South Wales v Secretary of the Treasury [2014] NSWCA 112

Resource Pacific Pty Ltd v Wilkinson [2013] NSWCA 33

S v Crimes Compensation Tribunal [1998] 1 VR 83

Salter v Building Appeals Board [2013] VSC 279

Schwartz Family Co Pty Ltd v Capitol Carpets Pty Ltd [2017] NSWCA 223

Soulemezis v Dudley (Holdings) Pty Ltd (1987) 10 NSWLR 247

The Australian Gaslight Company v Valuer-General (1940) 40 SR (NSW) 126

Tumney (NSW Food Authority) v Nutricia Australia Pty Ltd (2008) 74 NSWLR 148; [2008] NSWSC 1382

Vetter v Lake Macquarie City Council (2001) 202 CLR 439; [2001] HCA 12

Williams v Bill Williams Pty Ltd [1971] 1 NSWLR 547

Wingfoot Australia Partners Pty Ltd v Kocak (2013) 252 CLR 480; [2013] HCA 43

Texts Cited:

Nil

Category:

Principal judgment

Parties:

Taylor Construction Group Pty Ltd (ACN 067 428 344) (First Plaintiff)
Frasers Putney Pty Limited (Second Plaintiff)
Strata Plan 92888 trading as The Owners – Strata Plan 92888 (Defendant)

Representation:

Counsel:
G A Sirtes SC with B Le Plastrier (Plaintiffs)
T Davie with A Power (Defendant)

Solicitors:
Colin Biggers & Paisley Lawyers (Plaintiffs)
JS Mueller & Co Lawyers (Defendant)

File Number(s):

2020/253142

Publication restriction:

Nil

 Decision under appeal 

Court or tribunal:

New South Wales Civil and Administrative Tribunal

Jurisdiction:

Appeal Panel

Citation:

[2020] NSWCATAP 163

Date of Decision:

4 August 2020

Before:

S Westgarth, Deputy President
D Robertson, Senior Member

File Number(s):

AP 19/55886

Judgment

1. The plaintiffs, Taylor Construction Group Pty Ltd and Frasers Putney Pty Ltd (together, the Appellants) are, respectively, the builder and the developer of two multi-story residential buildings erected on land at X and X Lardelli Drive, Ryde NSW (Buildings).

2. The defendant, the Owners Corporation of Strata Plan 92888, is the registered proprietor of the common property in the land the subject of that strata plan and the Buildings (Owners Corporation).

3. In these proceedings, the Appellants seek to appeal from a decision of an Appeal Panel of the New South Wales Civil and Administrative Tribunal (NCAT): Taylor Construction Group Pty Ltd v The Owners - Strata Plan No 92888 [2020] NSWCATAP 163.

4. The Appeal Panel upheld the decision of a Senior Member of the Consumer and Commercial Division of NCAT who found in favour of the Owners Corporation’s claim that the use of “Biowood” combustible cladding on parts of the external walls of the Buildings does not comply with the Building Code of Australia (BCA) and breached statutory warranties implied into residential building contracts under s 18B(1) of the Home Building Act 1989 (NSW) (HB Act): The Owners Strata Plan No 92888 v Taylor Construction Group Pty Ltd and Frasers Putney Pty Ltd [2019] NSWCATCD 63.

5. Central to the decisions and this appeal is the finding that the use of Biowood does not comply with the BCA as it constitutes an undue risk of fire spread via the façade of the Buildings.

6. By their summonses filed on 1 September 2020, the Appellants seek orders that leave be granted to appeal from the whole of the Appeal Panel’s decision, that their appeals be allowed, that the decisions of the Appeal Panel and the Senior Member be set aside, and that the Owners Corporation pay the Appellants’ costs of the Appeal and of the NCAT proceedings.

7. Six grounds of appeal are raised, including whether the Appeal Panel erred in its formulation and application of the proper test under the BCA, whether there was evidence on which the finding that the use of the Biowood cladding constituted an undue risk of fire spread via the façade could be made, and whether the Appeal Panel’s reasons are adequate.

8. Section 83(1) of the Civil and Administrative Tribunal Act 2013 (NSW) (CAT Act) provides that, in the circumstances applicable in this case, an appeal to this Court is available by leave on questions of law only. The hearing proceeded on the basis that the parties’ submissions would be treated as submissions on the appeal in the event that leave was granted.

9. For the reasons that follow, I have concluded that leave should be granted but the appeal should be dismissed.

Background

Biowood and the Buildings

10. Biowood is a combustible material made from 70% reconstituted timber and 23% PVC and is installed on different areas of the Buildings. The location of the Biowood on the Buildings is depicted in photographs and diagrams in expert reports that were in evidence before the Senior Member and contained in the court book in these proceedings. Some of those images are reproduced in Annexure A to Annexure D of these reasons.

11. It may be observed from the photographs and diagrams in Annexure A to Annexure D that Biowood is installed on:

1. areas spanning vertically on the external walls of the Buildings, and about windows on different levels: see, for example, Annexure A , Annexure B and Annexure C.

2. areas known as “spandrels” [1] on the western and eastern façades of the Buildings: see Annexure B and Annexure C;

3. areas used as “shutters” on the south-western façade of one of the Buildings: see Annexure D; and

4. areas on the ground floor of the Buildings: see Annexure C and Annexure D;

   1. A spandrel is the vertical separation of openings in external walls.

12. The different locations of the Biowood and the vertical span alongside windows is of some significance, for reasons which I will come to.

The BCA: 2014 version

13. It is common ground that the 2014 version of the BCA (now the National Construction Code) (2014 BCA) applied at the time of the relevant building work. The following sets out the relevant provisions in force at the time. It is not in dispute that Biowood is a combustible material and the Buildings are classified as Class 2 (as they contain two or more sole-occupancy units) and Class 7a (as they have a basement carpark) buildings for the purposes of the BCA.

14. Section A of the 2014 BCA sets out the general provisions. Part A0 identifies that a Building Solution will comply with the BCA if it satisfies the Performance Requirements, which can only be achieved by complying with the Deemed-to-Satisfy Provisions or formulating an Alternative Solution, and that the ‘Objectives’ and ‘Functional Statements’ may be used as an aid to interpretation: A0.4, A0.5 and A0.6.

15. A1.1 sets out the Definitions, which relevantly include:

Combustible means—

(a)   Applied to a material — combustible as determined by AS 1530.1.

(b)   Applied to construction or part of a building — constructed wholly or in part of combustible materials.

External wall means an outer wall of a building which is not a common wall.

Fire hazard means the danger in terms of potential harm and degree of exposure arising from the start and spread of fire and the smoke and gases that are thereby generated.

Fire hazard properties means the following properties of a material or assembly that indicate how they behave under specific fire test conditions:

(a)   Average specific extinction area, critical radiant flux and Flammability Index, determined as defined in A1.1.

(b)   Smoke-Developed Index, smoke growth rate index, smoke development rate and Spread-of-Flame Index, determined in accordance with Specification A2.4.

(c)   Group number, determined in accordance with Specification C1.10.

Smoke-Developed Index means the index number for smoke as determined by AS/NZS 1530.3.

Spread-of-Flame Index means the index number for spread of flame as determined by AS/NZS 1530.3.

16. A2.4 of Part A2 provides that, where a Deemed-to-Satisfy provision requires a building component to have a fire hazard property, it must be determined for Spread-of-Flame Index, a material’s group number or smoke growth rate index, in accordance with Specification A2.4.

17. Clause 2 of Specification A2.4 provides:

2.   Assemblies

2.1   General requirement

The fire hazard properties of assemblies and their ability to screen their core materials as required under Specification C1.10 must be determined by testing in accordance with this Clause.

2.2   Form of test

Tests must be carried out in accordance with—

(a)   for the determination of the Spread-of-Flame Index and Smoke-Developed Index — AS/NZ 1530.3; and …

18. Clause 3 of Specification A2.4 sets out the manner in which a material’s group number must be determined by reference to testing under AS/NZS 3837 (AS3837).

19. Specification A1.3 lists AS/NZS 1530, Part 3 (AS1530.3) as a document referable to BCA A1.1 and Specification A2.4 and AS/NZS 3837 as a document referable to A1.1 and Specifications A2.4 and C1.10.

20. Section C of the 2014 BCA is headed “Fire Resistance” and contains many of the provisions relevant to these proceedings.

21. The Objective of Section C is stated as follows:

CO1

The Objective of this Section is to—

(a)   safeguard people from illness or injury due to a fire in a building; and

(b)   safeguard occupants from illness or injury while evacuating a building during a fire; and

(c)   facilitate the activities of emergency services personnel; and

(d)   avoid the spread of fire between buildings; and

(e)   protect other property from physical damage caused by structural failure of a building as a result of fire.

22. Section C sets out Performance Requirements, which include:

CP2

(a)   A building must have elements which will, to the degree necessary, avoid the spread of fire—

(i)   to exits; and

(ii)   to sole-occupancy units and public corridors; and

Application:

CP2(a)(ii) only applies to a Class 2 or 3 building or Class 4 part of a building.

(iii)   between buildings; and

(iv)   in a building.

(b)   Avoidance of the spread of fire referred to in (a) must be appropriate to—

(i)   the function or use of the building; and

(ii)   the fire load; and

(iii)   the potential fire intensity; and

(iv)   the fire hazard; and

(v)   the number of storeys in the building; and

(vi)   its proximity to other property; and

(vii)   any active fire safety systems installed in the building; and

(viii)   the size of any fire compartment; and

(ix)   fire brigade intervention; and

(x)   other elements they support; and

(xi)   the evacuation time.

23. Part C1 contains the Deemed-to-Satisfy Provisions and Specifications. C1.1(b) provides that Type A construction, the most fire-resistant type of construction, is required for Class 2 buildings of three or more storeys and Class 7 buildings of four or more storeys: Table C1.1.

24. Clause 3.1 of Specification C1.1 states that:

3. Type A Fire-Resisting Construction

3.1 Fire-Resistance of building elements

In a building required to be of Type A construction—

…

(b)    external walls, common walls, and the flooring and floor framing of the lift pits must be non-combustible.

25. The critical provision for the purposes of these proceedings is cl 2.4(a) of Specification C1.1 which provides:

2.4 Attachments not to impair fire-resistance

(a)   A combustible material may be used as a finish or lining to a wall or roof, or in a sign, sunscreen or blind, awning, or other attachment to a building element which has the required FRL if—

(i)   the material is exempted under C1.10 or complies with the fire hazard properties prescribed in Specification C1.10; and

(ii)   it is not located near or directly above a required exit so as to make the exit unusable in a fire; and

(iii)   it does not otherwise constitute an undue risk of fire spread via the facade of the building.

(b)   The attachment of a facing or finish, or the installation of ducting or any other service, to a part of a building required to have an FRL must not    impair the required FRL of that part.

26. It is common ground that cl 2.4(a) of Specification C1.1 was removed in the 2016 Amendment 1 version of the BCA. The replacement clause was not included in the court book in these proceedings.

27. C1.10, which relates to fire hazard properties, provides as follows:

C1.10   Fire hazard properties

(a)   The fire hazard properties of the following linings, materials and assemblies in a Class 2 to 9 building must comply with Specification C1.10:

…

(viii)   Attachments to floors, ceilings, internal walls and the internal linings of external walls.

(ix)   Other materials including insulation materials other than sarking-type materials…   

…

(c)   The requirements of (a) do not apply to a material or assembly if it is—

…

(xiv)   any other material that does not significantly increase the hazards of fire.

28. C1.12 provides that certain combustible materials may be used wherever a non-combustible material is required.

29. Specification C1.10 sets out the requirements in relation to the fire hazard properties of linings, materials and assemblies in Class 2 to 9 buildings as set out in Table 1 in cl 2, which relevantly provides:

Table 1 - Fire Hazard Property Requirement

Lining, material or assembly

Requirement

Wall linings and ceiling linings

Other materials including insulation

Clause 4

Clause 7

30. Clause 4 of Specification C1.10 provides that the group number of a material is determined by either physical testing in accordance with AS ISO 9705 or testing in accordance with AS3837 and that a material used as a “finish, surface, lining or attachment to a wall or ceiling must be a Group 1, Group 2 or Group 3 material used in accordance with Table 3 …”: subcll 4(a) and (c). Table 3 in cl 4 identifies the relevant material group numbers permitted for the different classes of buildings.

31. Clause 7 of Specification C1.10 provides that materials and assemblies in a Class 2 to 9 building not included in cll 3, 4, 5 or 6, must not exceed the indices set out in Table 4, which relevantly provides:

Table 4 OTHER MATERIALS
Material or assembly location	Flammability Index	Spread-of-Flame Index	Smoke-Developed Index
Other materials or locations and insulation materials other than sarking-type materials. Notes 2 and 3.	-	9	8 if the Spread-of-Flame Index is more than 5

Notes:

…

3.   In the case of a composite member or assembly, the member or assembly must be constructed so that when assembled as proposed in a building—

…

(b)   the member or assembly, when tested in accordance with Specification A2.4, has a Spread-of-Flame Index and a Smoke-Developed Index not exceeding those prescribed in this Table; …

Home Building Act

32. Section 18B of the HB Act sets out the warranties implied into contracts to do residential building work and relevantly provides:

18B   Warranties as to residential building work

(1)   The following warranties by the holder of a contractor licence, or a person required to hold a contractor licence before entering into a contract, are implied in every contract to do residential building work—

…

(b)   a warranty that all materials supplied by the holder or person will be good and suitable for the purpose for which they are used and that, unless otherwise stated in the contract, those materials will be new,

(c)   a warranty that the work will be done in accordance with, and will comply with, this or any other law,

…

(f)   a warranty that the work and any materials used in doing the work will be reasonably fit for the specified purpose or result, if the person for whom the work is done expressly makes known to the holder of the contractor licence or person required to hold a contractor licence, or another person with express or apparent authority to enter into or vary contractual arrangements on behalf of the holder or person, the particular purpose for which the work is required or the result that the owner desires the work to achieve, so as to show that the owner relies on the holder’s or person’s skill and judgment.

(2)   The statutory warranties implied by this section are not limited to a contract to do residential building work for an owner of land and are also implied in a contract under which a person (the principal contractor) who has contracted to do residential building work contracts with another person (a subcontractor to the principal contractor) for the subcontractor to do the work (or any part of the work) for the principal contractor.

33. As to “any other law” referred to in s 18B(1)(c), pursuant to cl 98(1)(a) of the Environmental Planning and Assessment Regulation 2000 (NSW) (EPA Regulation), any building work performed pursuant to a development consent must be carried out in accordance with the requirements of the BCA.

Proceedings before the Senior Member

34. The proceedings before the Senior Member involved an application by the Owners Corporation for an order that the Appellants carry out works to rectify defects and non-complying work (described as General and Major Defects) and/or an order that they pay the Owners Corporation damages for the cost of rectification. The General Defects claim was resolved between the parties.

35. The Major Defects claim concerned the use of Biowood cladding as architectural attachments on the external walls of the Buildings. The Owners Corporation claimed that, as it is combustible, the use of Biowood failed to comply with cl 2.4 of Specification C1.1 of the 2014 BCA and was, therefore, in breach of the statutory warranties in s 18B(1)(c) of the HB Act. It also claimed that, even if compliant with the BCA, the Biowood cladding was otherwise not fit for purpose in breach of the statutory warranty in subss 18B(1)(b) and (f) of the HB Act.

Evidence before the Senior Member

36. The evidence before the Senior Member included expert evidence from three Fire Engineers, Mr Nathan Halstead for the Owners Corporation, and Mr Etienne Jordaan and Mr Daniel Powell for the Appellants. Mr Halstead, Mr Jordaan and Mr Powell provided written reports and Mr Halstead and Mr Jordaan gave concurrent evidence before the Senior Member. Mr Halstead’s report dated 24 January 2019, Mr Jordaan’s reports dated 17 August 2018, 1 November 2018 and 8 March 2019 and a transcript of the proceedings before the Senior Member are included in the court book in these proceedings.

37. Also before the Senior Member (and included in the court book in these proceedings) were three documents to which he referred in his reasons and which were relevant to the evidence given by Mr Halstead and Mr Jordaan.

38. The first document is a CSIRO Certificate of Test Report of Biowood in accordance with AS1530.3 dated 13 January 2011 entitled “CSIRO Certificate of Test Report No. FNE10012 – AS/NZS 1530.3:1999 Simultaneous Determination of Ignitability, Flame Propagation, Heat Release and Smoke Release” (CSIRO Certificate). The CSIRO Certificate identifies the test results for Biowood as follows:

Ignitability Index (0-20)	Spread of Flame Index (0-10)	Heat Evolved Index (0-10)	Smoke-Developed Index (0-10)
13	0	1	7

39. The CSIRO Certificate states that:

The results of this fire test may be used to directly assess fire hazard, but it should be recognised that a single test method will not provide a full assessment of fire hazard under all fire conditions.

40. The indices identified in the CSIRO Certificate test results for Biowood are referred to in Mr Halstead’s and Mr Jordaan’s reports.

41. The second document is a document authored by A Webb and N White, CSIRO, titled “Fire safety guideline for external walls - A guide for high-rise construction in Australia” and dated 18 April 2016 (CSIRO Guideline). The CSIRO Guideline is expressed to be a document intended to aid building practitioners in understanding the fire hazards of combustible materials and pathways to demonstrate compliance in relation to façade fire safety under the BCA. The CSIRO Guideline states, amongst other things:

4.1 Fire hazard properties

…

BCA Specification C1.1 Clause 2.4 does not explicitly state which fire hazard properties requirement prescribed in BCA Specification C1.10 are to be applied. However based on the wording in BCA Specification C1.10 Clause 4(c), CSIRO interprets that the relevant requirement for attachments used as a finish, surface or lining to an external wall is that the material must be minimum Group 1, 2 or 3 based on AS ISO 9705 or AS/NZS 3837.

CSIRO considers that BCA Specification C1.10 clause 7 which specifies AS/NZS 1530.3 test requirements for other materials is not relevant or applicable for attachments used as external wall finish, lining or cladding.

…

4.3 Risk of Fire Spread

The attachment location and contribution to fire spread on the façade must be considered.

…

Compliance with the fire hazard property requirements does not automatically limit the risk of fire spread. In some cases a Group 1 rating may provide some indication that the "undue risk of fire spread" requirement is met. However because the arrangement and installation of materials and also the fire exposure is significantly different for an AS ISO 9705 test or an AS/NZS 3837 test compared to a full-scale façade fire, there may be cases where a Group 1 material would still support fire spread between levels in a full scale façade test. The risk that a material will support fire spread between levels is likely to increase for Group 2 and Group 3 materials.

…

9.2 Fire hazard properties from AS/NZS 1530.3

…

Practitioners must take care interpreting 1530.3 test data. For example, a spread of flame index of zero (0) does not indicate that the material will not spread flame in all fire situations. A group 3 material can achieve a spread of flame index of zero (0) in the AS/NZS 1530.3 and is highly likely to have flame spread the full extent of a vertical element once ignited.

42. The third document is titled “Technical Report No 3 – A review of fire retardant treatments, fire performance tests methods, and building codes in United States of America and Australia and their influence on the marketing opportunities for forest products”, WD Gardner, NSW Timber Advisory Council, Sydney 1986 (NSW Timber Technical Report). It states, amongst other things that the AS1530.3 test method is “based on observations of the performance of the wall lining materials in corner burn tests … designed to simulate the performance of wall lining materials in the early stages of a developing fire within a room”: at 2.1.2.1.

43. Mr Halstead’s report records that, in his opinion, all Biowood except where used as shutters on the south western façade and at ground level (which is subject to a “Performance Solution by Wood & Grieves”) should be removed as it represents an undue fire risk via the façade. Mr Halstead’s report states:

4.3 Assessment of Biowood against the Provisions of the BCA …

…

The Biowood extends up the facade in numerous locations, as shown in table 1 below. It extends over three storeys in many cases. In my opinion fire spread via the external walls where the Biowood is located, could enter the building from the façade via windows and balconies from level to level. Therefore, as the Biowood extends up the façade and joins each level it may (if ignited) allow fire spread into the building and cause undue fire risk via the façade.

The Biowood is combustible and in the locations shown below in Table 1, represents an undue risk to fire spread via the façade, contravening Clause 2.4(a)(iii) of BCA Specification C1.1.

44. Mr Jordaan’s 8 March 2019 report records that, in his opinion, the Biowood cladding used as an external attachment complies with Specification C1.10, either as wall linings under cl 4 based on achieving a group number of 3 under the AS3837 test or as “other materials” under cl 7 based on the AS1530.3 results, and would not present an undue risk of fire spread. Mr Jordaan’s 8 March report states:

6.1.2 Clause 2.4 of Specification C1.1 and Specification C1.10

Given the Biowood cladding complies with the fire hazard properties in Specification C1.10, the main item for consideration for the subject cladding would be whether it constitutes an undue risk of fire spread via the façade. Based on the Biowood achieving a spread of flame index of 0 and minor amount installed on the façade, it is considered that the Biowood cladding would not present an undue risk of fire spread and is therefore expected to comply with this clause [2.4(a) of Specification C1.1]. It is expected that the Biowood cladding would also comply with part (b) due to the spread of flame index of 0 achieved and the charring of the material creating an additional layer of protection as oppose to impairing the FRL.

…

7. Fire Safety and Risk Assessment

…

The fire safety review and risk assessment carried out and documented within this section, found that based on the current fire testing data available and the current extent and configuration of the external Biowood cladding installed, there is insufficient evidence to suggest that the subject Biowood is a high risk item and that it requires immediate actions to rectify. In fact, current fire testing data as discussed in Section 6.1 of this report, provide a strong indication that the risk of fire spread via the Biowood cladding is low given that the Biowood achieved a Spread of Flame Index of 0 (lowest achievable value for such a test).

45. As noted above, Mr Halstead and Mr Jordaan were cross-examined. Aspects of their evidence are referred to in the Senior Member and the Appeal Panel’s decisions and later in these reasons.

Summary of Senior Member’s decision

46. In his decision, the Senior Member sets out the relevant background, the legislative and BCA provisions, identifies the evidence before him and summarises the submissions of the parties: Senior Member’s reasons (SR) at [1]–[115].

47. The Senior Member identified two issues for determination (at SR [38] and [116]), as:

(1)   Whether the Biowood, as installed, is compliant with applicable codes and standards?

(2)   Even if the cladding is compliant with the codes and standards is the Biowood, as installed, a material which is fit for purpose?

48. The Senior Member recorded that it was common ground between the experts that Biowood is a combustible material made from 70% reconstituted timber and 23% PVC and has a Group 3 classification according to AS3837 testing, which is distinct from Group 2 fire retardant timber and Group 1 non-combustible or near non-combustible material: at SR [39], [124], [127]. He noted that the experts agreed that the BCA is the test which applies to all cladding and that cl 2.4 of Specification C1.1 requires that attachments to external walls not impair fire resistance. He also described the experts’ measure of risk as a function of at least three factors, namely, combustibility of the material, rate of flame spread and other safety measures: at SR [125]–[126].

49. The Senior Member’s consideration and findings are set out at SR [117]–[162].

50. At [117]–[120], the Senior Member deals with submissions concerning the legal effect of the Interim Occupation Certificate that had been issued on 8 August 2016 (IOC), which is not relevant to this appeal.

51. The next topic addressed by the Senior Member is “Relevant codes and standards”: at SR [128]–[135].

52. The Senior Member identified that he would consider “Clause 2.4 of the [BCA] Specification C1.1, Clause 7 and AS1530.3”. He found that the effect of the relevant codes and standards was that the Buildings were required to be of a Type A construction, they must have non-combustible external walls, and that a combustible material may be used as an other attachment if it is exempted under C1.10 or complies with the fire hazard properties prescribed in Specification C1.10 and, amongst other things, does not otherwise constitute an undue risk of fire spread via the façade of the buildings: at SR [128]–[130].

53. The Senior Member found the CSIRO Guideline to be “highly persuasive” with its findings that AS1530.3 for other materials was not relevant for attachments to buildings used as external wall finishes, linings or cladding, and that achieving a Spread of Flame index of 0 pursuant to the AS1530.3 test does not necessarily exempt Biowood under C1.10: at SR [131]–[132]. In doing so, the Senior Member referred to the “Lacrosse fire case”, noting that the Alucopanel in that case was found by VCAT to have satisfied AS1530.3 with a Spread of Flame Index of ‘0’ but proved to be dangerously inflammable when subject to a full scale façade test. Pausing here, Alucopanel is an aluminium composite panel that was used as cladding on the building that was the subject of a decision of the Victorian Civil and Administrative Tribunal (VCAT): Owners Corporation No.1 of PS613436T v LU Simon Builders Pty Ltd (Building and Property) [2019] VCAT 286 (Lacrosse fire case).

54. At [133] and [135], the Senior Member stated:

[133] Biowood is not “another attachment” that is exempted under C1.10 and even if cl 2.4 were to be regard as potentially applicable, Biowood is not exempted under C1.10 as there is no evidence that it complies with the fire hazard properties prescribed in C1.10.

…

[135] The Tribunal is satisfied that Expert Halstead’s adoption of the opinions of the CSIRO is persuasive evidence that Biowood is a combustible material and complies with the fire hazard properties prescribed by C1.10. It is assessed as a timber Group 3 material achieved through AS3837 test and that there is a risk that it will support fire spread between floor levels along the façade of the building. In accepting the CSIRO report as persuasive, the Tribunal finds that Expert Halstead’s opinion is preferred to the alternate test per AS 1530.3 propounded by the respondents’ Expert Jordaan as more relevant than AS 3837, where Biowood achieved a Spread or [sic] flame index of 0 to exempt Biowood under C1.10 and is therefore suitable as another attachment.

55. At SR [136]–[142], the Senior Member considered the topic of “Undue Risk”, and concluded that he was satisfied that Biowood constitutes an undue risk.

56. The Senior Member addressed the expert evidence and flame spread at SR [136]. He noted that Mr Halstead conceded that the heat given off burning Biowood would not be sufficient to ignite adjacent Biowood of itself and that Mr Jordaan’s conclusions are based on assumptions made in the absence of test data that the Biowood would not support self-sustained fire spread. The Senior Member considered that a slow rate of fire spread did not preclude a finding that there was an undue risk even though there was no evidence of a large scale fire testing of Biowood.

57. The Senior Member was satisfied that Mr Halstead, who he described as qualified and experienced to give an expert judgment, had established that there was a risk that the Biowood would support fire spread between levels of the building, “from compartment to compartment”, as it was “indisputably combustible”. He considered that any such risk was an undue risk, even if the material otherwise complies with the codes and standards, particularly as the Buildings, as high rise Type A buildings, were required to have non-combustible external walls and any risk had the potential to cause personal injury and physical damage. The Senior Member was satisfied that Mr Halstead had considered the measure of risk factor and safety measures, referring to his evidence that fire sprinklers, as the most significant fire safety measure, would have no relevance to external cladding. He considered that Mr Jordaan’s adoption of an “As Low As Reasonably Practicable” (ALARP) approach in reviewing fire safety and assessing risk, although uncriticised by Mr Halstead, did not eliminate risk or satisfy the assessment that there is no undue risk of fire spread between the compartments of the Buildings: at SR [137]–[141].

58. The Senior Member dealt with “Spandrels” at SR [143]–[145]. He noted that the use of Biowood on spandrels needed to comply with C2.6 of the 2014 BCA, which mandates that spandrels be a “non-combustible material having an FRL of not less than 60/60/60”. The Senior Member concluded that the Biowood creates an undue risk of fire spread from compartment to compartment via the façade of the Buildings and that Biowood attached to the spandrels does not comply with cl 2.4 of Specification C1.1.

59. The Senior Member considered the claim concerning the statutory warranties under s 18B(1) of the HB Act at SR [146]–[162].

60. The Senior Member accepted the Owners Corporation’s submission that combustible Biowood is not fit for purpose and breached the statutory warranty in s 18B(1)(b) when used as an attachment to a non-combustible external wall as it presents an undue risk of fire spread and, as such, diminishes the fire resistance of the external walls. The Senior Member’s conclusion was informed by what he described as the ”common sense test” referred to in the Lacrosse fire case involving a consideration of the purpose and type of the Buildings. In his view, that test dictates that it is illogical to stipulate that the external walls must not be combustible and then allow them to be covered in combustible attachments. He concluded that there is a real risk of fire spread between the levels of the Buildings such that the Biowood is not fit for purpose.

61. The Senior Member was satisfied that the warranties in subss 18B(1)(b), (c) and (f) were breached. He found that the use of Biowood does not comply with the BCA, which cl 98 of the EPA Regulation provided was a relevant law and which set the minimum standard for assessing fitness. He also concluded that the developer had made known the particular purpose of the building work and, on the balance of probabilities, had relied on the builder’s skill and judgment: at SR [158]–[161].

62. Based on his findings, the Senior Member ordered the Appellants to rectify the breach of the statutory warranties by removing the Biowood attachments installed on the façade of the Building and replacing them with attachments to the external walls which comply with the codes, standards and statutory warranties, and to pay the Owners Corporations’ costs as agreed or assessed on an ordinary basis.

Summary of Appeal Panel’s decision

63. Twelve grounds of appeal were included in the Appellants’ Amended Notice of Appeal of which eleven were recorded in the Appeal Panel’s reasons (AR) (at [30]) as being pressed before them as follows:

(1)   The Tribunal erred in applying an improper construction of Part 4A of the EP&A Act namely that on the issuance of an interim occupation certificate that Act does not create an irrebuttable presumption that the building is compliant with the BCA.

(2)   The Tribunal erred by failing to give proper weight to the evidence that the building had been previously certified as compliant with the BCA on 8 August 2016 where to do so would have affected the decision that the building was not so compliant.

(3)   The Tribunal erred in applying an improper construction of cl 2.4 (a)(iii) of the BCA, namely:

(a)   that any risk of fire is an undue risk of fire,

(b)   by assigning no meaning to, or by disregarding, the word “undue” found in that clause.

(4)   The Tribunal erred in applying the wrong legal test to the facts, namely by reversing the onus of proof and requiring the Appellants to prove that there was no undue fire risk for the purposes of cl 2.4 of the BCA.

(5)   The Tribunal erred by finding as fact that the Biowood attachment diminishes the fire resistance of the external walls in the absence of evidence of that fact.

(6)   This ground was not pressed at the hearing.

(7)   The Tribunal erred in finding that the Biowood attachment presented an undue fire risk.

In respect of s 18B(1)(b):

(8)   The Tribunal erred in applying the common sense test incorrectly to the facts, when determining whether the Biowood material supplied was good and suitable for the purpose for which it was used.

(9)   The Tribunal erred in finding that the Biowood material was not good or suitable for the purpose for which it was used.

In respect of s 18B(1)(f):

(10)   The Tribunal erred in applying the common sense test incorrectly to the facts when determining whether the Biowood material used was reasonably fit for a specified purpose or result.

(11)   The Tribunal erred by finding as a fact that:

(a)   the contract for building works made known to the developer the particular purpose for which the building work was required, and

(b)   the developer relied upon the builder's skill and judgment in achieving the particular purpose.

(12)   The Tribunal erred in finding that the Biowood material was not reasonably fit for the specified purpose for which it was used.

64. At AR [30], the Appeal Panel also referred to another ground (13) on which the Appellants had sought leave to appeal. According to this ground, the Tribunal’s decision was against the weight of the evidence which indicated that there was no risk of fire spread from the Biowood and the decision was not one that a reasonable Tribunal could reach.

65. The Appeal Panel noted that the effect of the Owners Corporation’s reply was a submission that there was no error made by the Senior Member nor any ground available justifying the grant of leave: at AR [32].

66. The Appeal Panel summarised the submissions of the parties at AR [34]–[74]. Earlier in its reasons, the Appeal Panel had set out the background to the proceeding and the relevant BCA and HB Act provisions and summarised the Senior Member’s decision: at AR [3]–[29]

67. The Appeal Panel noted that the appeal was brought as of right on a question of law or with the leave of the Appeal Panel on other grounds, as regulated by subss 80(2)(a) and (b) of the CAT Act, and that the primary question on the appeal was whether the Biowood material used as an attachment to external walls was used in conformity with the requirements of the BCA: at AR [76]–[77].

64. The Appeal Panel resolved each of the grounds of appeal as follows.

65. Grounds 1 and 2, which related to the issuance of the IOC, were rejected by the Appeal Panel. The Appeal Panel found that the issue of the did not create an irrebuttable presumption that the warranties under the HB Act had been complied with: at AR [79]–[81].

66. The Appeal Panel dealt with grounds 3 and 4 together and also rejected them: at AR [82]–[104].

67. The Appeal Panel commenced its consideration of grounds 3 and 4 by stating that it was necessary to construe the provisions of the BCA. Reference was made to the approach of Lindsay J in Owners – Strata Plan no 69312 v Rockdale City Council; Owners of SP 69312 v Allianz Aust Insurance [2012] NSWSC 1244. It was deduced from that decision that the task of the Tribunal was to construe the BCA as a formal document designed to provide standards for the promotion of public safety in the construction of buildings according to law and not by reference to what may or may not be the opinion of an expert or an assumption about the practical operation of the BCA amongst experts: at AR [83].

68. The Appeal Panel referred to the objectives of Section C of the BCA, the requirements under the “Functional Statements” and CP2, and other provisions of the BCA, including C1.10, Specification C1.10, and cll 2.4 and 3.1(b) of Specification C1.1: at AR [84]–[87].

69. The Appeal Panel rejected the Second Appellant’s submission that was critical of the Senior Member for not considering the effect of C1.10(c)(xiv) as the Appeal Panel did not consider that C1.10(c)(xiv) had any relevance to the interpretation of Specification C1.1 or cl 2.4(c)(iii) in particular. It noted that the BCA was a publication of the Australian Building Codes Board and referred to the observation of Simpson J (as her Honour then was) in Tumney (NSW Food Authority) v Nutricia Australia Pty Ltd (2008) 74 NSWLR 148; [2008] NSWSC 1382 at [71]–[74] that it may be appropriate to construe a code, apparently drafted by non-lawyers, on a more liberal and purposive approach giving considerable weight to the discernible intention of its authors and the purpose for which it and the individual provisions were drafted: at AR [88]–[89].

70. The Appeal Panel also referred to a statement in the Lacrosse fire case at [35] in support of the proposition that the BCA is not to be construed as if it were a statute requiring the operation of different parts of the Code to be reconciled such that each part has a field of operation: at AR [90]–[91]. The Appeal Panel considered that there was no reason to restrict the meaning of cl 2.4(a)(iii) by reference to C1.10(c)(xiv) and, whereas C1.10 is concerned with fire hazard properties, cl 2.4(a)(iii) is concerned with whether a combustible material otherwise constitute an undue risk of fire spread via the façade. In its view, cl 2.4(a)(iii) involves:

… a consideration beyond the properties of the material and may include a consideration of the extent of the material and its relationship to other parts of the building such as windows and balconies. This approach is consistent with the considerations to which Mr Halstead had regard.

75. The Appeal Panel referred to the findings of the Senior Member as concerning the requirement contained in cl 2.4(a)(iii) of Specification C1.1 that the Biowood does not “otherwise constitute an undue risk of fire spread by the façade”. It summarised the relevant findings at AR [92] as follows:

(1) In Mr Halstead's opinion, the Biowood will support fire spread between floor levels along the facade. The test recorded in AS1530.30 is not relevant because that test is concerned with fires occurring inside a building [135].

(2) Although burning Biowood will not ignite adjacent Biowood there remains a risk of burning Biowood supporting fire spread [136].

(3) A slow rate of fire spread does not preclude a finding that there is undue risk [136].

(4) Any risk that Biowood would support fire spread between levels of the building presents an undue risk [136].

76. The Appeal Panel referred to Mr Halstead’s evidence noting, at AR [93], that his report identified that:

(a)   his opinions relate to the subject building which is a multi-storey residential development with basement [1.2];

(b)   cladding in the form of Biowood has been installed to numerous areas of the façade. Biowood is a combustible cladding material and has fire properties that allow ignition and spread of flame [4.1]. The Spread of Flame Index is 0 [ 4.1];

(c)   the Biowood extends up the façade in numerous locations, as shown in a table attached to the report. It extends over three storeys in many cases [4.3].

77. The Appeal Panel rejected the Appellants’ submission that there was an insufficient basis to accept Mr Halstead’s evidence. It concluded that Mr Halstead’s report sufficiently exposed his reasons to justify acceptance of his opinion that fire spread via the external walls where the Biowood is located could enter the building through windows and balconies and occur across levels as the Biowood extends up the façade and joins each level: at AR [93]–[95].

78. The Appeal Panel considered the meaning of “undue risk” and the construction of cl 2.4(a)(iii) at AR [96]. It took “undue risk” to mean “unwarranted or excessive” risk, adopting the ordinary meaning of “undue” as contained in the Macquarie Concise Dictionary, and that, in the context of cl 2.4(a)(iii), undue risk is intended to refer to a level of risk of fire spread via the façade of the building constituting non-compliance with the BCA because it “impairs fire resistance”. The Appeal Panel considered that subcll 2.4(a)(i) and (iii) should be construed such that an attachment may constitute an undue risk of fire spread via the façade even if it is exempted under C1.10 or complies with the fire hazards properties described in Specification C1.10 as it was logical to construe the BCA as requiring an assessment of undue risk of fire spread even if the material concerned complied with cl 2.4(a)(i). It referred to Mr Halstead’s evidence that an AS1530.3 test is in respect of fires inside a building and not relevant to external cladding. In the Appeal Panel’s opinion, a Spread of Flame Index of ‘0’ under the AS1530.3 test may still constitute an “undue risk of flame spread”. Later, at AR [100], it noted that an index of ‘0’ does not indicate that the material does not spread flame, but is a relative term indicating a slower rate of fire spread. Reference was also made to the CSIRO Guideline.

79. The Appeal Panel held that the Senior Member’s findings contained in SR [135] and [136] were “open and display neither an error of law nor a ground for the grant of leave to appeal”: at AR [97].

80. The Appeal Panel rejected the First Appellant’s submission that the Tribunal found there was a need to establish the elimination of risk as “misconceived”. It considered that the Senior Member did not find there was no evidence of elimination of risk but found that Mr Jordaan’s evidence did not establish the elimination of “undue risk”, which was in addition to a finding that Mr Halstead’s evidence supported a finding of an undue risk of fire spread. The Appeal Panel also rejected the Appellants’ submission that the Senior Member relied on Mr Halstead’s interpretation of undue risk and that his finding of undue risk was an acceptance of the ipse dixit of Mr Halstead, concluding that the Senior Member relied upon Mr Halstead’s opinion that the use of Biowood would allow fire spread into the building: at AR [98]–[99].

81. The Appeal Panel concluded that the Senior Member did not err in applying cl 2.4(a)(iii) of Specification C1.1 to find that the use of Biowood on the Buildings constitutes an undue risk of fire spread via the façade and that the provisions of cl 2.4(a) are cumulative: at AR [102].

82. The Appeal Panel rejected the Second Appellant’s submission that the Senior Member had, in effect, reversed the onus of proof by requiring the Appellants to show that Biowood did not present an undue risk and accepted the Owners Corporation’s submission that the finding of undue risk was based on the evidence of Mr Halstead: at AR [103].

83. The Appeal Panel also rejected the Second Appellant’s submission that the Senior Member did not give due weight to Mr Jordaan’s opinion. It referred to the Senior Member’s finding that Mr Jordaan’s conclusions on matters that may be relevant to a finding of undue risk were based on assumptions that Biowood would not support self-sustained fire spread in the absence of any test data other than the AS1530.3 test. The Appeal Panel concluded that the Senior Member did not err in relying on Mr Halstead’s evidence for the findings of undue risk, taking such an approach or making those findings: at AR [104].

84. The Appeal Panel rejected ground 5, which concerned the submission that the Senior Member found that Biowood diminished the fire resistance of the external walls. The Appeal Panel held that, when SR [153] was taken as a whole, it was clear that the Senior Member did not make the finding contended for by the Appellants: at AR [105].

85. The Appeal Panel rejected ground 7, which concerned the Appellants’ submission that the finding of undue risk of fire spread was not open on the evidence, on the basis that it did not involve an error of law but was properly characterised as an alleged error of fact, as a finding against the weight of the evidence. The Appeal Panel held that there was sufficient evidence to make it “fairly open” for the Senior Member to find there was an undue risk of fire spread. It referred to the combustible nature of the Biowood with a rate of fire spread (albeit slow), the Biowood extending up the façade in numerous locations, Mr Halstead’s evidence that fire spread via the external walls where the Biowood is located could enter the building from the façade through windows and balconies, and that adjacent Biowood could ignite through the original source of the fire: at AR [107]. While not stated expressly, the Appeal Panel’s reasons on this ground also deals with what they referred to as the additional ground 13.

86. The Appeal Panel dealt with grounds 8 to 12, which concerned the findings of breach of the statutory warranties contained in subss 18B(1)(b), (c) and (f) of the HB Act, together and rejected them: at AR [109]–[114]. The Appeal Panel held that, as the Tribunal was correct in finding that the Biowood did not comply with the provisions of the BCA, there had been a breach of the warranties contained in subss 18(1)(b), (c) and (f). The submission that a builder who enters into a contract identified by its front page as a design and construct contract is not informed of the intended purpose of the contracted building work or the installation of the material was rejected as having an “air of unreality”.

87. The Appeal Panel made orders that dismissed the appeal, affirmed the Senior Member’s decision and required for the parties to file submissions on costs. There is no evidence before this Court of what costs orders in relation to that appeal were ultimately made, if any.

Appeal to this Court

88. Six grounds of appeal are raised by the Appellants’ summonses as follows:

1.   The Appeal Panel erred in its formulation of the test when determining whether Biowood constituted an “undue risk” of fire spreading via the façade of the Respondent’s building.

2.   The Appeal Panel erred in its application of the proper test to the facts, giving rise to an erroneous conclusion.

3.   The Appeal Panel erred in its application of the BCA to the facts, giving rise to an erroneous conclusion.

4.   The Appeal Panel found the existence of “undue risk” in the absence of evidence.

4A.   The Appeal Panel erred in finding that the use of “Biowood” breached the statutory warranties in subss 18B(1)(b), (c) and (f) of the HB Act in the absence of evidence and/or by application of the errors identified in grounds 1 to 4 above.

5.   The Appeal Panel failed to provide adequate reasons.

Should leave to appeal be granted?

89. This appeal is brought pursuant to s 83 of the CAT Act, which relevantly provides:

83 Appeals against appealable decisions

(1)   A party to an external or internal appeal may, with the leave of the Supreme Court, appeal on a question of law to the Court against any decision made by the Tribunal in the proceedings.

...

(3)   The court hearing the appeal may make such orders as it considers appropriate in light of its decision on the appeal, including (but not limited to) the following—

(a)   an order affirming, varying or setting aside the decision of the Tribunal,

(b)   an order remitting the case to be heard and decided again by the Tribunal (either with or without the hearing of further evidence) in accordance with the directions of the court.

90. The parties referred to the recent decisions of Bronze Wing International Pty Ltd v SafeWork NSW [2017] NSWCA 41 (Bronze Wing) and Corcoran v Far [2019] NSWSC 1284 (Corcoran) for the applicable principles governing appeals to this Court, which were summarised as follows:

1. appeals lie to the Supreme Court from the Appeal Panel on a question of law pursuant to s 83 of the CAT Act: Bronze Wing at [54];

2. the appeal to the Supreme Court is confined to the decision of the Appeal Panel rather than the Tribunal: Bronze Wing at [10] (Basten JA), [37] (Gleeson JA), [61] (Leeming JA); Corcoran at [21];

3. the appellants must demonstrate something more than that the decision of the Appeal Panel was arguably wrong. Ordinarily, leave will only be granted concerning matters that involve issues of principle, questions of general public importance or an injustice which is reasonably clear in the sense of going beyond what is merely arguable: Corcoran at [24], citing Jaycar Pty Ltd v Lombardo [2011] NSWCA 284 at [46] (Campbell JA, Young and Meagher JJA agreeing); Be Financial Pty Ltd as trustee for Be Financial Operations Trust v Das [2012] NSWCA 164 at [33] (Basten JA, Tobias AJA agreeing); and

4. the proper approach on an application under s 83 of the CAT Act is to identify the questions of law on which leave is sought in the Summons seeking leave to appeal: Corcoran at [26].

91. The Appellants submit that the appeal raises issues of principle as the Appeal Panel’s decision has application to cladding cases generally and is of public importance for disputes in NCAT and this Court concerning cladding work undertaken up to 12 March 2018, being the date on which cl 2.4 of Specification C1.1 was removed from the 2016 Amendment 1 version of the BCA.

92. The Appellants submit that the appeal raises questions of law as the grounds include whether the Appeal Panel identified the relevant legal test and applied the correct legal test, whether there is any evidence to support the Senior Member’s finding of a particular fact, and whether the facts found fall within the BCA as properly construed, relying on Federal Commissioner of Taxation v Trail Bros Steel & Plastics Pty Ltd (2010) 186 FCR 410; [2010] FCAFC 94 and Amaca Pty Ltd v Frost (2006) 67 NSWLR 635; [2006] NSWCA 173 at [55]. They also submit that the appeal involves an injustice which is reasonably clear, in the sense of going beyond what is merely arguable.

93. At the hearing, the Owners Corporation accepted that there is a public interest or importance about the issues raised by the appeal, which was a reason why leave to appeal could be granted (T57.47–T58.2). However, the Owners Corporation submits that leave to appeal should not be granted because it would not change the outcome of the Senior Member’s decision. It also submits that some of the grounds of appeal, such as grounds 2, 3 and 4, assert error and/or do not properly articulate a question of law.

94. Before commenting on the grounds of appeal, I first consider the threshold issue raised by the Owners Corporation which is, in essence, a contention that leave to appeal should be refused as the appeal is futile or moot and would, if correct, lead me to conclude that leave to appeal should be refused: Gray v Minister for Energy, Environment & Climate Change [2020] VSCA 121 at [23]–[24] (Tate, Beach and Kaye JJA).

Threshold issue – is the appeal moot?

95. The Owners Corporation’s contention that leave to appeal should be refused is based on the submission that the Senior Member’s decision is to the effect that the Biowood combustible cladding is not “another attachment” and does not satisfy cl 2.4(a)(i) of Specification C1.1 of the BCA. The Owners Corporation contends that, as a consequence, success by the Appellants in this appeal on grounds that only concern undue risk under cl 2.4(a)(iii) could not affect the Senior Member’s conclusion that the Biowood combustible cladding does not fall within cl 2.4 or satisfy the requirements of cl 2.4(a)(i) and, thus, fails to comply with the BCA.

96. In support of that submission, the Owners Corporation contends that the Senior Member found that Biowood is not exempted under C1.10 or “another attachment” that complies with the fire hazard properties in Specification C1.10, at SR [133]. It submits that the effect of the Senior Member’s findings at SR [135] is that, even though the Biowood sample tested complied with the fire hazard properties in Specification C1.10 (being that referred to in cl 7), the Senior Member preferred Mr Halstead’s opinion adopting the views expressed in the CSIRO Guideline that the AS1530.3 test for cl 7 of Specification C1.10 is not relevant or applicable to external cladding.

97. The Owners Corporation says that the Senior Member’s findings at [133] and [135] reflected and upheld its submissions to the effect that the AS1530.3 test is not relevant or applicable to external cladding and that compliance with that test does not necessarily exempt it as “another attachment” that complies with the fire hazard properties for “other materials” under cl 7 of Specification C1.10. It submits that the Senior Member’s findings at [133] and [135] were sufficient to determine the Owners Corporation’s claim in its favour and justify the order made. The Owners Corporation says that those findings were not the subject of the grounds of appeal to the Appeal Panel and are not (and could not be) the subject of appeal to this Court.

98. The Appellants dispute the Owners Corporation’s characterisation of the Senior Members’ findings and what was, and was not, raised in the appeal to the Appeal Panel. They also submit that, if the Owners Corporation’s understanding of the Senior Member’s decision is correct, insofar as this appeal does not include a ground of appeal in relation to cl 2.4(a)(i), the Court should grant leave to the Appellants to appeal in relation to the findings on the basis that the Senior Member erroneously applied AS3837, rather than AS1530.3.

99. In their written submissions in reply, the Appellants contend that the Owners Corporation’s submissions should be rejected because there was no finding by the Senior Member in relation to cl 2.4(a)(i), and thus none for the Appeal Panel to consider.

100. They also submitted that the Owners Corporation called no evidence in relation to cl 2.4(a)(i) and the case both before the Senior Member and the Appeal Panel was one of undue risk under cl 2.4(a)(iii) and any attempt by the Owners Corporation to reframe the case otherwise should be rejected. I do not accept that submission. In my view, it is apparent from the Owners Corporation’s written submissions in the NCAT proceedings before the Senior Member that it advanced a case that Biowood was not an “other attachment” for the purposes of cl 2.4 of Specification C1.1 and did not satisfy cl 2.4(a)(i), in addition to a case that Biowood constituted an under risk under cl 2.4(a)(iii). The structure and content of the Senior Member’s reasons, which identified the parties’ submissions and made findings by reference to the separate headings of “Relevant codes and standards” and “Undue risk”, also reflect that distinction: at SR [39]–[52], [71]–[92], [128]–[142].

205. Accordingly, ground 4 fails, as do grounds 2 and 3 based on the submissions advanced in support of those grounds together with ground 4.

Ground 4A: The Appeal Panel erred in finding that the use of Biowood breached the statutory warranties in subss 18B(b), (c) and (f) of the HB Act in the absence of evidence and/or by application of the errors identified in appeal grounds 1 to 4.

220. At the hearing, the Appellants accepted that ground 4A is linked to the finding of undue risk and non-compliance with the BCA and that if I am against them on “undue risk” as raised by grounds 1 to 4, they cannot succeed on ground 4A (T69.21–9).

221. In other words, the Appellants accept there was no error on the part of the Appeal Panel in upholding the Senior Member’s decision that each of the statutory warranties in subs 18B(1)(b), (c), and (f) of the HB Act were breached having concluded that the use of Biowood did not comply with the BCA as the material presented an undue risk of fire spread (noting they take issue with the finding of undue risk). Accordingly, based on my conclusions on the other appeal grounds, appeal ground 4A also fails and will be dismissed.

222. As it was the subject of submissions, I should record that there was debate about the findings on breach of the fitness for purpose warranties. The Appellants submitted that the Appeal Panel’s findings of breach were based on reasoning of non-compliance with the BCA and undue risk, an acceptance that the BCA sets the minimum standard against which fitness for purpose was to be assessed, and its correct rejection of the Owners Corporation’s submission before the Senior Member that s 18B(1)(f) is breached by the use of Biowood even if the BCA requirements are met.

223. The Owners Corporation submits that the Senior Member’s finding that Biowood combustible cladding was not fit for purpose was not contingent upon there being a failure to comply with the BCA (T59.11–30). It also submits that, in addition to the evidence, there are two additional factors justifying the conclusion that Biowood cladding is not fit for purpose even if it complies with the BCA. Those matters are, first, the subversion of the fundamental fire safety requirement that external walls be non-combustible by cladding them with combustible attachments and, second, the recognition of this illogicality by the changes introduced to cl 2.4 of Specification C1.1 in response to “recent fires”.

224. In my view, the Appeal Panel’s findings that the Senior Member was correct in concluding that the use of Biowood breached the statutory warranties in subss 18B(1)(b), (c) and (f) were predicated on the finding that the use of Biowood constitutes an undue risk of fire spread and, thus, is not compliant with the BCA. The Appeal Panel accepted the correctness of the Senior Member’s decision that Biowood breached s 18B(1)(b) by reasoning that material installed in a multi-storey residential building which “does not comply with the BCA is … material that is not suitable for the purposes for which it is used…”: at AR [111].

225. I also consider that the Senior Member’s findings that Biowood is not fit for purpose and in breach of subss 18B(1)(b) and (f) were premised on his finding of undue risk and, thus, non-compliance with the BCA. The connection between those findings is apparent from the Senior Member’s finding that “It follows that Biowood is not fit for purpose when used as an attachment” (at SR [154]) after he had referred to his finding that “combustible Biowood used as an attachment to a non-combustible external wall presents an undue risk of fire spread” (at SR [153]), the Owners Corporation’s evidence that Biowood has the risk of permitting fire spread from compartment to compartment via the exterior of the building (at SR [153]), and the BCA setting the “minimum standard by which fitness for purpose is to be measured” (at SR [152]).

226. Accordingly, I accept the Appellants’ contention that there was no finding by the Senior Member that the HB Act had been breached that was independent of the finding of undue risk and reject the Owners Corporation’s submission that the finding of breach of the warranties under the HB Act in this case was not contingent on the finding of a failure to comply with the BCA.

227. Thus, if I had found that the Appeal Panel erred in upholding the Senior Member’s finding that the use of Biowood constituted an undue risk of fire spread and was not compliant with cl 2.4(a) of Specification C1.1 of the BCA, I would have concluded that the Appeal Panel’s findings concerning breach of the statutory warranties in subs 18B(1)(b), (c), and (f) of the HB Act should be set aside as the determination of breach was not on any basis other than non-compliance with the BCA. The submissions advanced by the Owners Corporation that there are factors and evidence that support the conclusion that the Biowood combustible cladding is not fit for purpose even if it complies with the BCA raises questions of fact do not arise in this appeal.

Conclusion, costs and orders

228. In conclusion, I do not accept that the Appellants have established any of their grounds of appeal against the Appeal Panel’s decision that upheld the Senior Member’s decision. The appeal to this Court pursuant to s 83 of the CAT Actwill be dismissed.

229. I see no reason why the usual order that costs follow the event should not apply and propose to make an order for the Appellants to pay the Owners Corporation’s costs of these proceedings. As the parties did not address the issue of costs, I have deferred entry of the proposed costs order for 14 days to enable a party to make an application if they consider a different order should be made. In that event, that party should confer with the other parties and, before the order takes effect, notify my Associate by email that a different costs order is sought together with their written submissions on that issue (of no more than three pages) and an agreed date for submissions in response, with a view to the issue being determined on the papers.

230. For these reasons, I make the following orders:

1. Grant leave to appeal.

2. Dismiss the amended summons filed by the First Plaintiff and the cross-summons filed by the Second Plaintiff.

3. Unless any party makes an application for a different costs order within 14 days, the Defendant’s costs of these proceedings be paid by the First and Second Plaintiffs on an ordinary basis as agreed or assessed.

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Annexure A – Biowood vertical span, south-eastern façade

(Images in Annexure A reproduced from Mr Jordaan’s 8 March 2019 report)

Annexure B – Biowood spandrels and vertical span, western façade

(Images in Annexure B reproduced from Mr Jordaan’s 8 March 2019 report)

Annexure C – Biowood spandrels, vertical span and ground floor, eastern façade

(Images in Annexure C reproduced from Mr Jordaan’s 8 March 2019 report)

Annexure D – Biowood shutters, south-western façade and Biowood at ground level

(Top three images in Annexure D reproduced from Mr Jordaan’s 8 March 2019 report. Bottom image reproduced from Mr Halstead’s report)

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Endnote

Decision last updated: 18 October 2021